Even though regulations on the import of services have been in effect in Polish law for some time, questions still arise whether in each case when a Polish entity purchases a given service, there is a need to declare the importation of services in the settlement for value added tax. One controversial case is the quite frequent purchase of an airline ticket from a foreign contractor.
- In such a case, should the Polish taxpayer recognize the import of services in the JPK VAT? On whose part is the obligation of settling VAT?
To answer these question, not only is it necessary to examine the provisions of the VAT Act, but also the opinion of the tax authorities on this matter.
Who is obliged to settle VAT?
Entities obliged to settle the tax on goods and services are taxpayers who deliver goods and provide services. Sometimes, as the Act indicates, entities obliged to settle VAT may also be the purchasers of goods and services. This is mentioned in Article 17(1)(4) of the VAT Act, which imposes an obligation to settle VAT on taxpayers who purchase services from taxpayers who do not have a place of business or a fixed place of business in the territory of the country, i.e. Poland. This is a transaction defined by the law as an import of services (Article 2(9) of the VAT Act).
Important: In determining where a given provision of services should be taxed, it is crucial to determine the place of its provision.
Place of Service Provision
Article 28b(1) of the VAT Act indicates the place of supply of services when services are rendered to a taxpayer, as the place where the taxpayer who is the recipient of the services has a place of business, subject to paragraphs 2-4 and Article 28e, Article 28f(1) and (1a), Article 28g(1), Article 28i, Article 28j(1) and (2), and Article 28n. Among the indicated exceptions was Article 28f (1) the VAT Act on the provision of passenger services, according to which the place of provision of passenger transport services is the place where the transport takes place, considering the distance covered.
Since the purchase of airline tickets is under analysis, we are dealing with air transport of passengers, the rules for determining the place of supply of which are set forth in § 3(1)(1) of the Decree of the Minister of Finance dated December 16, 2013 on the place of supply of services and reimbursement of the amount of input tax to the entity purchasing (importing) goods and services (Journal of Laws 2021, item 80, as amended). Pursuant to this provision, in the case of the provision of international passenger transport services by means of sea or air transport, the place of provision of these services is the territory of the country. The provision of sec. 1 does not violate the provisions in force in other European Union Member States (§ 3(2) of the aforementioned regulation). The rule above applies to VAT payers who provide the services in question. A failure to assume that the aforementioned § 3(1) of the Regulation applies only to taxpayers of value added tax, selling the services in question would lead to a situation in which both the sale of international air tickets on the part of foreign contractors and their purchase would be taxed in Poland. As a result, there could be a double taxation of the described transactions.
The opinion of the tax authorities
According to the tax authorities, the provisions above show that in connection with the purchase of air tickets from foreign taxpayers, there is no import of services, as the service provider, i.e. a foreign entity, will be obliged to settle this transaction. In view of the above, the recipient of the service, a Polish taxpayer, will not be obliged to show this transaction in the records for VAT. By way of example, the following individual interpretations may be indicated here:
- Director of the Tax Chamber in Lodz dated November 29, 2012. (ref. IPTPP2/443-816/12-4/eR)
- Director of the Tax Chamber in Katowice dated October 30, 2013. (ref. IBPP4/443-353/13/PK)
- Director of the Tax Chamber in Poznan from December 8, 2014. (ref. ILPP4/443-498/14-2/ISN)
- Director of National Fiscal Information dated March 19, 2019. (ref. 0111-KDIB3-3.4012.381.2018.1.PK)
As we read in the final interpretation: “(…) Referring the above provisions of the tax law to the factual state presented in the application, it should be stated that the Applicant purchasing air services becomes the purchaser of the service provided by a foreign carrier. The Applicant is not obliged to tax it, because the legislator in no way binds this obligation to the purchaser of the service - there is no import of services in the present case within the meaning of Art. 2(9) of the Act. In the case of the above-mentioned services, the service provider (carrier) is the taxpayer obliged to settle the tax. All in all, it should be stated that if a foreign carrier does not have a registered office or a permanent place of business in Poland, there is no import of services on the part of the Applicant (…).
Analyzing the legal provisions above and the presented opinion of the tax authorities, one should conclude that taxpayers purchasing airline tickets for passenger transportation from foreign carriers are not required to show the import of services in the JPK VAT register kept for VAT purposes.